Ford Motor Co. must take more time to figure out dealership consolidation.
Two years ago, Ford saw what everyone else saw in America's sprawling, often messy, network of dealerships. Customers were unhappy, and costs were high. There must be a better way, Ford thought.
To its credit, Ford tried to fix the situation; it launched the Tulsa Auto Collection in 1998 and later consolidated dealerships in other cities. But like many great leaps forward conceived by central planners, it stumbled badly. The business model - low-haggle selling, large inventories and common ownership of various stores - was worth testing. But Ford vastly underestimated the task of combining its dealerships in Tulsa.
Now, Ford says it is reining in its grand vision for Auto Collections. Ford may want to keep Auto Collections. But the lesson from Tulsa is to proceed carefully.
Also, it is crucial to maintain a strong role for entrepreneurial dealers. The first Tulsa organization de-emphasized the role of dealers, and two weeks ago Ford purchased majority control by buying out four of the six original dealer investors.
Dealers in touch with local conditions can best maintain an efficient distribution network. The factory, no matter how brilliant, cannot manage the complex world of retailing from a central office in Detroit or Los Angeles.
DaimlerChrysler is on the right track with its Five Star dealership program. Dealers are given clear guidelines to shape up and earn Five Star status. Then, DaimlerChrysler gives them special advantages. For example, only Five Star dealers are referred sales leads from the company's Get a Quote Web site.
Ford's motives behind the Auto Collection were sound. But the company's methods were not.